Yesterday, the NASDAQ posted a 2.7:1 positive breadth ratio, which was the best since August 18th of last year, just 3 days after what is the most important low in the last two years. Very impressive!
SHORT TERM: POSITIVE. After a short term top, and an apparent completion of five waves up from the late Oct lows last fri/mon in the NAZ/NDX, we were anticipating a short term decline. The decline occurred, but only lasted one day, and the NAZ took off again to the upside extending the five wave advance into an extended nine wave structure. As of fridays close, we have completed waves i - iv, and waves 1 - 2 of wave v; i.e. six waves: see "15min" charts. There is a possibility that wave 3 completed on friday, at least in the NDX. The NAZ/SPX and DOW appear to need a minimal new high before they complete wave 3. So we are close, if not at, another short term 1 - 2 day correction. After, this occurs, another advance should commence taking all four indices to new highs, and then possibly a more meaningful correction will occur. Will keep you posted. After watching this uptrend for a month now, it's character has begun to reveal itself. This is a strong advance, much more so than either the Aug 2004, or the Apr 2005 advances. Thus, confirming that it is a third wave. I would expect, from here on out, even the short term moves will become somewhat more predictable. Lets see how that unfolds. http://spaces.msn.com/members/caldaroEW/
Tony, Since you deal with patterns a lot and you put a lot of honest work in your analysis, I would like to know if you see a wave pattern that would allow for the possibility of stock indices to trade in a narrow range until after the Thanksgiving holiday and then fall after that. I know you're bullish and I sincerely think that there are as many chances of you being right instead of me (obviously bearish) but I would be curious to know if there is a sequence of waves that would make the scenario I described to be a likely one and if so, what would be the number or the name of the waves.
Steve, We could remain in a narrow range, with slightly higher highs, and then correct after Thanksgiving. But this intermediate term advance would not be over. We would still need at least another five wave sequence higher to complete the uptrend. Let's just say I'm looking for 1280 SPX minimum. Tony
An extended resistance trendline reaches 1280 at the end of next February ... Is this what you're forecasting?
Not necessarily, but it would be a good place to pause. Wave (i) was 107 points, wave (iii) should be at least 107 points; i.e. wave iii = wave i. From the Oct 21st low of 1175, projects a wave equality at 1282. I'm actually expecting more, since this is a third of a third, but it would be a good place to pause in this uptrend. My primary expectation is wave iii = 1.618 x wave i = 173 points. That would give us a top in the SPX of 1348. But let's see how this uptrend unfold first.
HI! SHORT TERM: NEUTRAL. The new high in the SPX/DOW we anticipated just occurred. However, with continued weakness in the NDX/NAZ I'd expect a short term pullback here, for a day or so. Then, another good advance to new highs. tony